Yesterday the House Oversight Committee held a hearing on the Diveroli Debacle. Somehow, a 22-year-old arms dealer and his unknown company AEY got a $300 million contract to supply ammunition to the Afghan Security Forces.
It turned out that AEY was buying up old Chinese-made ammunition which the Albanians had already offered to donate for free, and selling it back to the US government at a massive profit.
Witnesses testified that AEY was selected to supply ammo despite a poor track record on previous contracts. We also know that the contract was awarded while Diveroli and some of his key associates were a on a State Department watch list of suspected illegal arms traffickers.
Basically, the hearing concentrated on information that the Committee could easily obtain--testimony from officials and internal documents. This is a huge service. Now that information is in the pubic record for journalists and other interested parties to move the story forward.
The hearing established unequivocally that there was startling misconduct on the part of procurement officials.
The State Department has also opened a probe into the U.S. Ambassador to Albania, whom the committee suspects of acting improperly.
Perhaps the hearing didn't delve into the details of how AEY became an international arms trafficking powerhouse in the first place because Diveroli and his crew were indicted on federal charges and arrested. Congressional investigators may be hoping that the prosecution will do the heavy spadework on the Diveroli crew.
Update: Thomas Frank has a good op/ed on the Diveroli Debacle in today's Wall Street Journal.
It turned out that AEY was buying up old Chinese-made ammunition in Albania, ammo the Albanian government offered to donate for free, and selling it back to the US government at a massive profit.
wow, see how efficient the free market is. let's privatize the rest of government!
Posted by: pretzelattack | June 25, 2008 at 12:23 PM
I don't know that the GAO can take a look at all these contracts.. ya know a little auditing and demand the money back.
I would guess that more than half the money in these contracts went for profit and is in Swiss Banks and other offshore havens.
Why are our congress critters wasting our hard earned tax dollars?
Posted by: SanderO | June 25, 2008 at 02:31 PM
Congressional investigators may be hoping that the prosecution will do the heavy spadework on the Diveroli crew.
Or, Congressional investigators may not want to grant immunity to people who maybe ought to be in jail.
Posted by: Alan Bostick | June 25, 2008 at 02:55 PM
Two sides of the same coin, IMO.
Posted by: Lindsay Beyerstein | June 25, 2008 at 02:59 PM
Umm, take a look at the parents and relatives of these guys. At least one is involved in similar sorts of arms sales.
No way these guys set themselves up in business and so rapidly pulled down these substantial ammunition contracts.
It seems to me that these guys are simply a front. There may also be an eastern european mafia angle to this as well.
It was pretty sloppy not to rebox that ammunition. If they had then China wouldn't have been an issue. They must have wanted to save time, or book an even greater profit. Of course the ammunition was substandard so there were plenty of performance complaints about it.
Is there a betting pool on how long it takes them to get their Preznidential Medal of Freedom?
Posted by: jon | June 25, 2008 at 03:18 PM
Efraim Diveroli's dad was an active participant in AEY and the company's founder. Efraim's uncle, PK Botach, is an LA arms dealer and military surplus vendor. Efraim and his father worked for Botach briefly before returning to Florida to start their own company.
Posted by: Lindsay Beyerstein | June 25, 2008 at 03:29 PM
Now that information is in the pubic record for journalists and other interested parties to move the story forward.
It was recorded where??
Posted by: Andrew J. Lazarus | June 26, 2008 at 12:30 AM